Bill Text: CA SB54 | 2023-2024 | Regular Session | Amended

California Senate Bill 54

NOTE: There are more recent revisions of this legislation. Read Latest Draft

Bill Title: Venture capital companies: reporting.

Spectrum: Partisan Bill (Democrat 11-0)

Status: (Passed) 2023-10-08 - Chaptered by Secretary of State. Chapter 594, Statutes of 2023. [SB54 Detail]

Download: California-2023-SB54-Amended.html

Amended IN Senate March 20, 2023

Amended IN Senate March 16, 2023

CALIFORNIA LEGISLATURE— 2023–2024 REGULAR SESSION

Senate Bill

No. 54

Introduced by Senator Skinner

December 06, 2022

An act to add Chapter 40 (commencing with Section 22949.85) to Division 8 of the Business and Professions Code, relating to professions and vocations.

LEGISLATIVE COUNSEL'S DIGEST

SB 54, as amended, Skinner. Professional investors: fair investment practices.

Existing law generally prohibits discrimination in the provision of privileges and services on the basis of sex, race, color, religion, ancestry, national origin, disability, medical condition, genetic information, marital status, sexual orientation, citizenship, primary language, and immigration status. Existing law provides a cause of action against any person who denies, aids or incites a denial, or makes any discrimination or distinction on the bases listed, as specified, and permits the recovery of attorney’s fees. Whenever there is reasonable cause to believe that any person or group of persons in engaged in conduct of resistance to the full enjoyment of any of the rights, as specified, and that conduct is intended to deny the full exercise of those rights, existing law authorizes the Attorney General, any district attorney or city attorney, or any person aggrieved by specified conduct to bring a civil action by filing a complaint that includes, but is not limited to, a request for preventive relief.

Existing law establishes the Department of Consumer Affairs (department), comprised of specified boards, bureaus, and commissions, for the purpose of ensuring that private businesses and professions deemed to engage in activities that have potential impact on the public health, safety, and welfare are adequately regulated in order to protect the people of California. Existing law requires these boards, bureaus, and commissions to establish minimum qualifications and levels of competency and license persons desiring to engage in the occupations they regulate, as specified. Civil Rights Department (department) and makes it responsible for, among other things, investigating and prosecuting complaints alleging a violation of these provisions.

This bill would prohibit a professional investor doing business in California from engaging in specified sexual conduct as a basis for a business investment transaction, engaging in specified sexual conduct that has the purpose or effect of unreasonably interfering with an individual’s working relationship with a person by creating an intimidating, hostile, humiliating, or sexually offensive environment, or discriminating on the basis of a protected characteristic when sponsoring, guaranteeing, granting, or making available funds. The bill would define various terms for these purposes. The bill would authorize an individual, specified local prosecutors, or the Attorney General to bring a civil action for a violation of these provisions, and authorize a court to grant specified relief in that action. The bill would require the department, in consultation with the Attorney General and the Secretary of State, to establish compliance guidelines to assist professional investors in complying with these provisions, as specified, including by advising professional investors to submit a report to the department at least once every 3 years that includes specified information. The bill would make it an affirmative defense in an action described above if the professional investor can demonstrate by a preponderance of the evidence that the professional investor complied with the compliance guidelines and submitted the report within the previous 3 years.

Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO

The people of the State of California do enact as follows:

SECTION 1.

Chapter 40 (commencing with Section 22949.85) is added to Division 8 of the Business and Professions Code, to read:

CHAPTER 40. FAIR INVESTMENT PRACTICES BY PROFESSIONAL INVESTORS Fair Investment Practices by Professional Investors

22949.85.

For purposes of this chapter, the following definitions apply:

(a) “Department” means the ~~Department of Consumer Affairs.~~ Civil Rights Department.

(b) “Compliance guidelines” means the compliance guidelines created by the department pursuant to Section 22949.88.

(c) “Person” means an individual, partnership, firm, joint stock company, corporation, association, trust, estate, or other legal entity.

(d) “Professional investor” means a person whose business includes sponsoring, guaranteeing, or granting funds or engaging in investment transactions.

(e) “Protected characteristic” means race, color, religious creed, national origin, sex, gender identity, sexual orientation, age, genetic information, ancestry, status as a veteran, handicap, or pregnancy or a condition related to said pregnancy including, but not limited to, lactation or the need to express breast milk for a nursing child.

(f) “Protected class” means a group of people sharing a protected characteristic.

22949.86.

A professional investor doing business in California shall not do any of the following:

(a) Make a sexual advance, make a request for a sexual favor, or engage in other sexual conduct, either directly or through an intermediary, when submission to or rejection of that advance, favor, or conduct is made a basis for a business investment transaction.

(b) Make a sexual advance, make a request for a sexual favor, or engage in other sexual conduct, either directly or through an intermediary, when the advance, request, or conduct has the purpose or effect of unreasonably interfering with an individual’s working relationship with a person by creating an intimidating, hostile, humiliating, or sexually offensive environment.

(c) Discriminate on the basis of a protected characteristic when sponsoring, guaranteeing, granting, or making available funds.

22949.87.

(a) Any of the following may bring a civil action against a professional investor for a violation of subdivision (a) of Section 22949.86:

(1) An individual injured by the violation.

(2) A district attorney, county counsel, city attorney, or city prosecutor in the jurisdiction in which the violation occurred in the name of the people of the State of California.

(3) The Attorney General in the name of the people of the State of California.

(b) In an action brought under subdivision (a) a court may grant any of the following:

(1) Statutory damages of five hundred thousand dollars ($500,000) per violation or actual damages, whichever is greater.

(2) Injunctive relief.

(3) Reasonable attorney’s fees and costs.

(4) Punitive damages, except as provided in subdivision (e).

(c) A civil action under this section shall be commenced within three years after the date of the violation of subdivision (a) of Section 22949.86.

(d) It shall be an affirmative defense against a cause of action for violation of paragraph (3) of subdivision (a) of Section 22949.86 if the professional investor can demonstrate both of the following by a preponderance of the evidence:

(1) The professional investor complied with the compliance guidelines.

(2) The professional investor submitted the report described in paragraph (3) of subdivision (a) of Section 22949.88 within the previous three years.

(e) All remedies accruing under this chapter are cumulative to each other and to the remedies available under any other law.

22949.88.

(a) By January 1, 2025, the department, in consultation with the Attorney General and the Secretary of State, shall establish compliance guidelines to assist professional investors in complying with the requirements of this chapter. The guidelines, at a minimum shall advise professional investors to do all of the following:

(1) Include a policy in the professional investor’s organizational charter that details how the professional investor will comply with this chapter.

(2) Adopt clear procedures for the professional investor’s operations to ensure that the professional investor and their employees and agents comply with this chapter.

(3) Submit a report to the department at least once every three years that includes all of the following information:

(A) The number of investments made.

(B) The size of each investment.

(C) Demographic information for the recipient of each investment, including, but not limited to, any protected characteristic.

(4) Comply with the rules, regulations, and other guidance developed by the department pursuant to subdivision (c).

(b) The department, in consultation with the Attorney General and the Secretary of State, shall update the compliance guidelines as needed and at least once every three years.

(c) The department shall promulgate rules, regulations, or other guidelines to implement this section, which may include model templates for a professional investor to modify and adopt.